Correlation Between Amplify ETF and Fidelity Covington

Can any of the company-specific risk be diversified away by investing in both Amplify ETF and Fidelity Covington at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Amplify ETF and Fidelity Covington into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amplify ETF Trust and Fidelity Covington Trust, you can compare the effects of market volatilities on Amplify ETF and Fidelity Covington and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Amplify ETF with a short position of Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amplify ETF and Fidelity Covington.

Diversification Opportunities for Amplify ETF and Fidelity Covington

-0.02

Correlation Coefficient

Amplify ETF  Fidelity Covington

Good diversification

The 3 months correlation between Amplify and Fidelity is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Amplify ETF Trust and Fidelity Covington Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Covington Trust and Amplify ETF is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Amplify ETF Trust are associated (or correlated) with Fidelity Covington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Covington Trust has no effect on the direction of Amplify ETF i.e., Amplify ETF and Fidelity Covington go up and down completely randomly.

Pair Corralation between Amplify ETF and Fidelity Covington

Given the investment horizon of 90 days Amplify ETF Trust is expected to under-perform the Fidelity Covington. But the etf apears to be less risky and, when comparing its historical volatility, Amplify ETF Trust is 1.05 times less risky than Fidelity Covington. The etf trades about -0.09 of its potential returns per unit of risk. The Fidelity Covington Trust is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,357  in Fidelity Covington Trust on December 30, 2024 and sell it today you would lose (55.00) from holding Fidelity Covington Trust or give up 4.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Amplify ETF Trust  vs.  Fidelity Covington Trust

Amplify ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amplify ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Fidelity Covington Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Covington Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fidelity Covington is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Amplify ETF and Fidelity Covington

The main advantage of trading using opposite Amplify ETF and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amplify ETF position performs unexpectedly, Fidelity Covington can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fidelity Covington will offset losses from the drop in Fidelity Covington's long position.

The idea behind Amplify ETF Trust and Fidelity Covington Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.